Focus on Personal Finances

High Debt Levels

Higher levels of corporate, government, and personal debt may be creating a more fragile economic environment. In past decades, low debt was considered prudent and desirable. Today, fiscal policies pursued by the US Federal government have pushed our national debt over $28 trillion, and zero interest rate (ZIRP) monetary policies of the US Federal Reserve Bank (the Fed) effectively encourage higher debt for corporations and households. Are higher debt levels a good thing or do they create more potential for economic instability?

Impact of Leverage

In 2008/2009 excess leverage (debt) caused a credit freeze and major recession. Now, leverage imbedded throughout the economy may again be creating conditions where even relatively minor credit incidents or interest rate changes might cause economic stress.

Back to Basics

That is why it is ever so important to have a plan in place. Actively manage your income, liabilities and investment assets for both present day needs and long term goals. Start with the basics and re-evaluate your household finances. In fact, we’ve developed a household expenses & budget tool for this very purpose. It can help you in two ways. First, our expense tool helps you determine your retirement planning income target. Second, it shows how your spending habits look versus the average American household in a certain income bracket.

Knowledge is Power

Simply knowing and seeing how your income is allocated over time is a great starting point. This knowledge can help you identify where to make changes, and sometimes even seemingly small changes may have a significant impact on your financial future. Visit our contact page here, type “expense worksheet” in the Tell Us More section, and we’ll send you the tool. You are welcome to drop us a line. Thanks for visiting!

 

Disclaimer
This material is provided by Schmitt Wealth Advisers for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product.  Opinions expressed by Schmitt Wealth Advisers are based on economic or market conditions at the time this material was written.  Economies and markets fluctuate.  Actual economic or market events may turn out differently than anticipated.  Facts presented have been obtained from publicly available sources believed to be reliable.  Schmitt Wealth Advisers, however, cannot guarantee the accuracy or completeness of such information.  Past performance may not be indicative of future results.

More Posts Like This

  • Supply/Demand Imbalances

    Our Outlook

    Global supply chain issues are both a supply and a demand problem. On the supply side, labor has become scarce. Pandemic related mandatory shutdowns, COVID quarantines, and older worker retirement decisions have combined to create a serious labor shortage. In the October National Association of Business Economics (NABE) survey, 47% of respondents reported a shortage […]

  • Investing & Planning

    Our Outlook

    Each Halloween, or ‘All Saints Eve’, ushers in All Saints Day on November 1st.  In Christian traditions, both All Saints Day and All Souls Day (November 2nd) are annual reminders of our own mortality. This makes each November a good time for investors to review their beneficiary designations. Make it habit to set aside an […]